Proposal would 'scoop' money from RI Housing to balance budget

Thursday

Feb 15, 2018 at 12:01 PMFeb 15, 2018 at 9:33 PM

Christine Dunn Journal Staff Writer ChristineMDunn

PROVIDENCE, R.I. — While Rhode Island voters have supported $75 million in affordable housing bonds in recent years, the General Assembly has taken to raiding its own quasi-public housing bank — Rhode Island Housing — to balance its budget.

In fiscal 2018, the General Assembly took $1 million from Rhode Island Housing, and Governor Raimondo's new fiscal 2019 budget is seeking $5 million from the agency.

To housing activists, who point out that Rhode Island provides little support for housing compared with neighboring states, this reliance on Rhode Island Housing for cash infusions is disheartening. They cite the state's well-documented need for more housing that is affordable for millennials and senior citizens.

In 1991, Rhode Island Housing was ordered to transfer $10 million to the state's general fund. In 1996, $1.5 million was transferred from the housing agency to the state.

In 2008, the state ordered up a whopping $26.02 million from Rhode Island Housing, over two fiscal years, and the agency had to take out a loan to pay the state this amount. Part of the transfer was credited to fiscal 2008 and part to fiscal 2009.

Rhode Island Housing made the last payment on this loan in June 2017, and it cost Rhode Island Housing roughly $2 million to borrow the $26 million.

Clement said she often thinks about "what could have been done with that money" to house struggling Rhode Islanders.

Barbara Fields, executive director of Rhode Island Housing, explained last week in testimony to the House Committee on Finance that by extracting money from the agency, the state government depletes net assets, which are "a major factor in determining our overall credit rating." That in turn determines "the favorability of the interest rate we can borrow at."

The extractions also deplete the amount that Rhode Island Housing can use to fund down-payment and closing-cost assistance programs for first-time home buyers, she said.

When asked about this practice, known in political circles as a "scoop," House spokesman Larry Berman directed questions to the governor's office. "This scoop was recommended by the Governor — $5 million this year and $5 million next year — so I think this question would be better directed to her office. The House heard testimony, but has made no decision yet as to whether it will go along with her recommendation."

"There were a lot of difficult decisions that had to be made in order to address the projected deficits for FY18 and FY19," said Brenna McCabe, spokeswoman for the Department of Administration, in an emailed statement.

"The governor’s priority was to ensure we were protecting the investments she and the General Assembly made together, as well as eligibility and benefits for our most vulnerable Rhode Islanders," McCabe wrote. "Although it may not be an ideal situation, the governor’s proposed budget protects those priorities. We certainly don’t make these transfers lightly, but in assessing the unrestricted balances of the state's quasi-public corporations, we felt it necessary and responsible to help address the current year and FY19 projected gaps."

Nationally, the funding scenario for housing is looking bleak in 2018.

According to the National Coalition for Low Income Housing, President Trump's fiscal 2019 budget request, released Monday, "slashes federal housing benefits" and "proposes to cut HUD by an astounding $8.8 billion, or 18.3-percent, compared to the 2017 enacted levels."

Although the president, in an "addendum stemming from the bipartisan budget agreement ... suggests that $2 billion above his request could be added back in for a final proposed cut of $6.8 billion," even that cut "could lead to at least 200,000 housing vouchers being lost, as well as the elimination of public housing resources and funding used by state and local governments to address their pressing housing and community development needs."

cdunn@providencejournal.com /

(401) 277-7913

On Twitter @ChristineMDunn

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